Sat. Dec 14th, 2019

US-China trade developments to drive the Rand’s price this week

The Rand held its ground last week after major currencies strengthened.

us china trade developments to drive the rands price this week 1024x512 - US-China trade developments to drive the Rand’s price this week

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This was largely due to the South African Reserve Bank
(SARB) signalling that interest rates could remain at 6.5% until late next year,
after keeping rates unchanged in November’s rate decision.

The country’s state-owned South African Airways (SAA) agreed
on a 5.9% wage agreement which put an end to the eight-day strike by SAA
employees.

In terms of local data this week, there are just a few lower
tier reports out of South Africa. The fourth quarter business confidence will
get things going on Wednesday. Expectations are that we will see a seven-index
point drop from 21 to 14.

On Thursday, October’s PPI data will be released. The month-on-month figure is forecast to come in at 0.3% after rising by 0.2% in September. October’s balance of trade figure is due out on Friday and, after clocking an impressive R5.16 billion for September, we expect the figure to come in at a deficit of R3.1 billion.

76b82097 rand report graph 2019 11 26 - US-China trade developments to drive the Rand’s price this week

Looking abroad, lingering US-China trade uncertainty weighed
on risk appetite. The Rand remained relatively strong compared to other
emerging currencies. ZAR traders should keep an eye out for any developments in
the trade war as it is likely to have an impact on the Rand due to the negative
correlation the ZAR has to the USD and the impact the trade war has on emerging
currencies.

Market
event calendar

Tuesday 26 November

  • Germany GfK consumer confidence (December)

Wednesday 27 November

  • US personal income and spending (October)
  • US durable goods orders (October)
  • US GDP growth rate estimate (Q3)

Thursday 28 November

  • South Africa PPI (October)
  • Eurozone business confidence (November)
  • Germany preliminary inflation rate (November)

Friday 29 November

  • South Africa balance of trade (October)
  • UK
    GfK consumer confidence (November)

-Dein Reich

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